The Federal Reserve's unrealized losses on bond holdings narrowed to less than $850 billion last year.

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ME News report, April 15 (UTC+8), New York Federal Reserve local time on Monday said that the Federal Reserve’s unrealized losses on its large bond holdings last year narrowed compared with 2024. The book loss for 2025 is $844.2 billion, while it was $1.06 trillion for 2024.

This figure was disclosed when the System Open Market Account (SOMA) annual report was released. The account covers the large amount of cash, bonds, and other assets held by the Federal Reserve.

The Federal Reserve’s unrealized losses on its bond holdings are mainly on the accounting level. In the view of the Federal Reserve and many observers, these paper losses do not affect the Federal Reserve’s operations because there are no plans to sell the U.S. Treasuries and mortgage-backed securities it holds. As long as the assets are held to maturity, they will not generate any actual losses relative to the purchase price.

However, some believe that these paper losses reflect a negative track record of the Federal Reserve using its balance sheet as a tool for market stabilization and stimulus, and they argue that, in theory, these losses could turn into real problems in the future.

(Source: Jin10)

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